Assume each event is independent of the others. For each subsequent event:

Indicate what action you believe you, as the auditor, should take given the circumstance as described

Explain why you feel this is the correct action to take. Support your explanation with reference to the auditing standards as appropriate.

For the purpose of this activity, recall that the financial statements are dated December 31, 2018. Assume that the audit report will be dated February 15, 2019. The company is called Colta Pipeline. They charge customers for the service of transporting natural gas from Canada to the processing facility in Colorado.

February 2, 2019

A municipal road crew was doing road repairs on a secondary road that runs over top of a section of the pipeline. During the road work, a backhoe operator accidentally damaged a portion of the pipeline. ColAlta has filed a lawsuit claiming damages in the amount of $65,000.

January 9, 2019

When cleaning up her work space one day, one of the Accounts Receivable / Billing clerks discovered an invoice dated December 27, in the amount of $800 to 21 Century Energy, Inc. This invoice had been printed but fell down behind the clerks desk before being mailed to the customer.